If you have read the Huntington Beach City Charter and think that you have the right to elect your city treasurer, don’t be so sure.

Section 311 of the City Charter—the city’s equivalent to the U.S. Constitution—calls for the treasurer to be elected by the voters at large. But budget cuts and other changes approved Dec. 20 by a 6-0 majority of the Huntington Beach City Council (Connie Boardman was absent) leave little more than a figurehead for a treasurer instead of the vigilant watchdog intended by the charter.

The Director of Finance, who is appointed by the council and answers directly to the City Manager rather than the electorate, will assume the treasurer’s core duties if the legal wording behind the new policy is taken at face value.

The apparent coup d’état was performed by eliminating Section 2.16 of the Municipal Code, which explained the duties and powers of the City Treasurer in detail based on the City Charter, and then attaching several of its provisions to the end of Section 2.15 of the Municipal Code that explains the duties and powers of the Director of Finance.

Outgoing City Treasurer Shari Freidenrich warned that transferring the treasurer’s duties as proposed would be in “direct conflict with the charter and state law.” Eliminating staff would cause the treasurer’s investment decisions to suffer, she said, and went against the will of the voters, who had voted to keep their elected officials elected many times.

Freidenrich was elected to the office of Orange County Treasurer in November. She received kudos earlier at the council meeting (her last) from City Manager Fred Wilson for15 years of service in which she “restored the honor and integrity to the City Treasurer’s position” after the notorious 1994 Orange County bankruptcy.

But Wilson had presented an entirely different analysis than Freidenrich’s in his presentation to the council, saying that the city would save over $100,000 a year by making the treasurer a part-time position and consolidating the City Treasurer’s duties with the Finance Department while preserving the authority and independence of the office. “[Only] the duties and responsibilities not required by the City Charter to be performed by the City Treasurer shall be migrated to the finance director,” Wilson said.

Councilmember Keith Bohr asked City Attorney Jennifer McGrath if the city was in compliance with the law. “Yes, we are,” McGrath answered, “The charter does not speak to whether this position is part time or full time. And by deleting the ordinance you are actually taking it back to the core responsibilities as dictated in the charter.”

City Manager, Fred Wilson. Photo: Arturo Tolenttino SCV

Councilmember Joe Shaw asked if the City Treasurer’s office would retain its ability to act as an independent oversight in order to provide the checks and balances that it is intended to provide as an elected office. In the future, will the City Treasurer be able to do that?

“Absolutely,” Wilson answered.

Based on McGrath’s two sentences of legal analysis and Wilson’s word, and without cross checking Freidenrich’s assertions with the City Charter, all six council members present were satisfied with the plan. But if they had bothered to read the outside analysis which Wilson cited in his written report as the basis for the final recommendations or to double-checked the charter for themselves before voting, they might have had second thoughts.

But the Anderson report notes only one non-core function spelled out in chapter 2.16 of the Municipal Code: the collection of money. The report correctly notes that although the charter requires that the treasurer ultimately “receive” all city funds it does not prohibit the initial collection of the money by other agencies. The report recommends that function—and only that function—be transferred to the finance department.

The Anderson report goes further. In order to create a part-time treasurer and still provide the support necessary for that position to fulfill its charter mandate, it recommends that the City Treasurer have “primary support from the Finance Department to accomplish the Offices’ (sic) responsibilities.”

The report, which the six present council members apparently did not read because—although cited—it inexplicably was not attached to Wilson’s written report and probably also because they didn’t ask to read it, did not recommend cutting sections of chapter 2.16 that enumerate the charter mandated duties and powers of the City Treasurer and pasting them into chapter 2.15, which explains the duties and powers of the Department of Finance, but that’s exactly what Wilson did.

The result is a conflict between the city’s municipal code and the city’s charter, and a virtual coup d’état, either by design or by sloppy staff work, and by sloppy council oversight. Nobody on the city council bothered to check, but comparing the wording in the charter to the wording of the amended city law proves the point.

“The City Treasurer shall have the power and shall be required to,” according to the charter, “Receive on behalf of the City all taxes, assessments, license fees and other revenues of the City…”

But now, under the amended city code 2.15(k), the Director of Finance “Receives all City monies including taxes, fees, water, sewer and trash fees…”

Again, the City Charter states that the City Treasurer shall “Have and keep custody of all public funds belonging to or under the control of the City or any such office, department of agency of the City government and deposit or cause to be deposited all funds coming into his hands in such depository as may be designated by resolution of the City Council…”

But now, according to the amended city code 2.15(h), the Director of Finance “Establishes and controls all bank accounts, negotiates services and contracts with bank, makes daily deposits,…” and, regarding investments, in 2.15(l) also “maintains all trusts, bonds, security agreements, and funds for the City including depositing…”

Nowhere in the amended city code does it state that the City Treasurer has any authority over her transferred duties or powers, another indication that the supposed “consolidation” is at best an accidental transfer of power with the potential for future legal headaches or, at worst, a deliberate takeover.

September 15, 2009

At a town hall meeting held by the city’s Charter Review Commission, residents of Huntington Beach were asked to comment on possible changes to the City Charter, including the idea of changing the elected offices of city attorney, city clerk and city treasurer to appointed positions.

It was one of several meetings where the topic would be discussed along with many other charter reform ideas. At the end of the commission’s term various charter reforms were proposed to the council for placement on the ballot, but converting elected positions to appointed positions was not one of them.

Although strong arguments were made on both sides of the debate of elected versus appointed city officials, the question had already been put to the voters many times and their response was always crystal clear: ballot measures to have an appointed city attorney failed seven times; an appointed city clerk failed four times; and, an appointed city treasurer failed five times, most recently in 1996.

Due to the likelihood of yet another rejection by voters, the commission went with a proposal for stricter eligibility requirements for city treasurer instead of creating an appointed position, and that was passed by the voters.

In the past, the voters seemed to have said that they wanted accountability directly to the public in order to provide better checks and balances in local government. Freidenrich, speaking at the town hall meeting, noted the pressures that could be placed on an appointed treasurer to produce interest income, pressures that might lead to risky investments for the taxpayers. “An elected treasurer can be independent and unbiased an select the most important investments for the city,” she said.

In contrast, speaking at the Dec. 20 council meeting, member Don Hansen suggested a way for assisting the new part-time city treasurer to provide the “safety, security and liquidity” for the city that had been Freidenrich’s trademark by all accounts: investment bankers. They will be at the new city treasurer’s disposal, he said, and “we can’t dismiss their responsibility and commitment to the city in providing their services and experience…”

Whether the residents of Huntington Beach retain their right to elect their city treasurer in reality or in name only, and the extent to which they will have to rely on the recently proven commitment of investment bankers to to protect the public’s best interests, may depend on what happens at the second reading of the amended ordinance at the next city council meeting.

In response to a Voice inquiry, McGrath defended the quick legal opinion she gave to the council, and said the council’s actions were “wholly consistent with the City Charter, the Municipal Code and state law.” As for not answering Freidenrich’s assertions, it was not her responsibility to respond “unless asked by my client.” Only Bohr asked her a question. To that extent, she says, “I responded accordingly and there were no further questions.”

McGrath assured that she would be working closely with the city manager, finance director and treasurer to make sure that law is properly followed. But she also acknowledged that—in response to the concerns raised by the Voice—her office will “follow-up” by taking another look at the language of the ordinance, and “if an amendment is necessary to clarify any ambiguity, then it can be made at second reading on January 17 (sic), 2011.”

Note: The city council meeting will actually take place on the 18th due to Martin Luther King Day on Monday.